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May 18, 2011 4:34 PM

Dewey, Cravath Advise on $1 Billion Allstate Buy

Posted by Claire Zillman

Correction: The original version of this article failed to note that Cravath, Swaine & Moore partner Eric Hilfers was among the firm's partners advising White Mountains Insurance Group on this transaction. The article has been updated to correct that. We regret the error.

In an effort to expand its online presence, Allstate Corporation announced Wednesday that it will buy auto insurer Esurance and Answer Financial, a Web-based insurance agency, from White Mountains Insurance Group.

Allstate will pay a combined total of $700 million for the two companies, plus the tangible book value of Esurance and Answer Financial at the time the deal is completed, pushing the transaction's total price tag close to $1 billion.

Allstate turned to its longtime M&A counsel at Dewey & LeBoeuf, the insurer's deal counsel since 1996, for representation. Lead lawyer John Schwolsky has advised Allstate on such transactions as the company's $1.2 billion merger with American Heritage Life Insurance Corp and its $1.1 billion purchase of CNA's personal lines business. Schwolsky was joined on the deal by Dewey partners Alex Dye, Kirk Lipsey, Gordon Warnke, Shane Milam, Howard Adler, Jonathan Damon, Jeff Schwartz, and William MacDonald. 

Allstate general counsel Michele Coleman Mayes, deputy general counsel Mary McGinn and David Nadig, assistant general counsel Steve Ihm, and corporate counsel Elizabeth Lapham made up the company's in-house team.

White Mountains relied on Cravath, Swaine & Moore partners Erik Tavzel, Eric Hilfers, Phil Gelston, and Steve Gordon. Esurance general counsel Kerian Bunch also played a role in the deal, as did White Mountains general counsel Rob Seelig and associate general counsel Jason Lichtenstein.

By picking up of Esurance--which has 545,000 customers and is the nation's third-largest provider of online auto insurance quotes--Allstate lands a punch in its battle against rivals Progressive and Geico. comparison. The latter, with 10 million policyholders, dominates the online car insurance market, according to The Wall Street Journal

Answer Financial, meanwhile, serves as an online middleman that links insurers with consumers searching for car and property insurance. It collects a commission on every successful match it makes and has about 350,000 customers. 

While Allstate is the largest public home and auto insurer in the United States, it has traditionally sold policies through local agents and has lost business to online-based insurance companies in recent years, the Journal reports. 

The deal is expected to close in the fall.

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